Will Leaked MLB Financials Alter Revenue-Sharing?

There was something oddly fitting about both a statue of Bud Selig being unveiled and the final set of leaked MLB financial documents becoming public on Tuesday. Selig has said on more than one occasion that we’re witnessing the “Golden Era” of baseball, citing the economic windfall that has come to the league over the last decade. Revenue-sharing, a pride and joy of Selig’s, is at the center of the largest public release of club financial documents – leaked to Deadspin – that include the Pirates, Rays, Mariners, Marlins, Angels, and Rangers (see them all here).

In July of 2000, with the league claiming projected losses of $232 million for the 2001 season, Selig came before Congress with his Blue Ribbon Panel on Baseball Economics report, which at its heart states, “Proper competitive balance will not exist until every well-run club has a regularly recurring reasonable hope of reaching postseason play.” The report then went on to say that, “The limited revenue sharing and payroll tax that were approved as part of MLB’s 1996 Collective Bargaining Agreement with the Major League Baseball Players Association have produced neither the intended moderating of payroll disparities nor improved competitive balance. Some low-revenue clubs, believing the amount of their proceeds from revenue sharing insufficient to enable them to become competitive, used those proceeds to become modestly profitable.”

So, with each Collective Bargaining Agreement since, revenue-sharing has been increased, funneling money from the haves to the have-nots of the league in order to gain competitive balance. In 2009, $433 million in revenue-sharing moved from high-revenue clubs to those in need of assistance.

Along the way, sizable increases in the amount of “central revenue” has found its way into club coffers. The growth of national television money from ESPN, FOX Sports, and TBS which total approx. $660 million a year in rights fees funnel back to each of the 30 clubs. Add in annual dividend checks from MLB Advanced Media of $2 million, revenues from MLB Properties, international broadcast agreements, etc.,  and all clubs, large revenue-making, or not, have found extra money that can be used to help produce a winning product on the diamond.

Still, the field would remain unlevel without revenue-sharing tied to net local revenues, so with the leaked Deadspin docs having three clubs (the Pirates, Marlins, and Rays) that have received considerable amounts via the revenue-sharing system, the documents provide ammunition for clubs such as the Yankees and Red Sox when collective bargaining begins in earnest shortly after the World Series ends.

Parsing the documents, here’s how much revenue-sharing was either received or paid out for a given year:

Revenue Sharing
Year Club Amount (+/-)
2009 Angels ($16,402,000)
2008 Angels ($14,747,000)
2008 Rays $35,345,277
2007 Rays $39,380,713
2009 Marlins $43,973,000
2008 Marlins $47,982,000
2008 Pirates $39,046,312
2009 Pirates $30,302,652
2008 Mariners ($16,174,000)
2007 Mariners ($8,284,000)
2009 Rangers ($5,495,000)
2008 Rangers $5,495,300
2007 Rangers ($5,005,398)

Revenue-sharing is defined by the CBA as monies that are to be used “in an effort to improve its performance on the field.” The vagueness of the provision is designed to give elasticity – clubs down in their development cycle can choose to use the funds to develop talent, or use it to fuel payroll at the Major League level. Looking at the leaked docs and 3 clubs that have historically received revenue-sharing, we can factor in ML payroll, player development , and subtract revenue-sharing from that total :

Year Club Player Dev ML  Payroll Total
(Before Rev)
Rev Share Total
(After Rev)
2007 Pirates $21,166,850 $50,871,186 $72,038,036 $30,302,652 $41,735,384
2008 Pirates $23,182,677 $51,040,233 $74,222,910 $39,046,312 $35,176,598
2007 Rays $21,900,693 $36,563,305 $58,463,998 $39,380,713 $19,083,285
2008 Rays $20,017,186 $56,018,335 $76,035,521 $35,345,277 $40,690,244
2008 Marlins * $29,970,000 $29,739,000 $59,709,000 $47,982,000 $11,727,000
2009 Marlins * $30,024,000 $43,002,000 $73,026,000 $43,973,000 $29,053,000

* Includes amateur player signing bonuses from separate line item

When adding in Central Fund dollars, the balance tips from clubs unable to fund their major league rosters and pay for player development. Several years for these three clubs sees excess money (shown as a negative value), with only the Pirates in 2008 still requiring funds to cover player costs.

ML Salary + Player Dev – Rev Share – Central Funds
Year Club Player Cost
(Adj)
Central Funds Player Cost After
2007 Pirates $41,735,384 $41,751,550 -$16,166
2008 Pirates $35,176,598 $34,584,688 $591,910
2007 Rays $19,083,285 $23,877,635 -$4,794,350
2008 Rays $40,690,244 $19,778,648 $20,911,596
2008 Marlins * $11,727,000 $31,298,000 -$19,571,000
2009 Marlins * $29,053,000 $31,592,000 -$2,539,000

* Includes amateur player signing bonuses from separate line item

To be clear, there are other costs in running a ballclub. Sales and marketing… ballpark operations…. team expenses, etc… the latter table is not a case of saying that local revenues aren’t needed, or that revenue-sharing should be abolished, but it does show that outside revenue sources meet player salary and development needs.

While there is long-tern debt to consider, Net Income, which is is operating profit after depreciation, interest, taxes, and other expenses for each of the clubs, gives a solid measure of profit.

It is these figures from the leaked documents that will rankle the likes of the Yankees and Red Sox the most as it shows that (especially in the case of the Pirates), subsidized clubs, despite losing for long stretches, are making a profit. In a sign that revenue-sharing is still needed (but, arguably, not at the levels currently seen), when subtracting Net Income from Revenue-Sharing we get the amount of “over subsidy” for the years and clubs in the leaked docs (e.g. $24,638,063 more than needed for the Pirates in 2008):

Year Club Net Income Rev Share Diff
2008 Pirates $14,408,249 $39,046,312 $24,638,063
2007 Pirates $15,008,032 $30,302,652 $15,294,620
2009 Marlins * $3,900,000 $43,973,000 $40,073,000
2008 Marlins $29,462,000 $47,982,000 $18,520,000
2008 Rays $4,016,163 $35,345,277 $31,329,114
2007 Rays $11,066,191 $39,380,713 $28,314,522

* Lower net income due to new stadium expenses

What Will Be the Outcome from the Leaked Docs?

Over the years, the battle in MLB has shifted from being about “players vs. owners” to “low-revenue clubs vs. high-revenue clubs”.  Since clubs don’t share their financial information, each of the 30 clubs now has visibility to more than one other club’s financial data. So, the reaction by the public could be getting mirrored in front offices across the league.

What seems clear is that when collective bargaining comes around, talk of lowering the amount of revenue-sharing that the current CBA has will be a hot topic. At the least, the leaked docs gives considerable weight to saying that more revenue-sharing is not needed.

This may not be a one-size-fits-all affair. Looking at the net income figures for the Rays in comparison to the Pirates and the Marlins, and one could argue that a new stadium could help bolster their bottom line, something that ownership has said repeatedly. It’s not hard to imagine that the Athletics are in much of the same position. Lowering revenue-sharing could conceivably place those two clubs in difficult, or possibly dire positions. And, remember, we’re just looking at the very bottom of the player payroll spenders. Those slightly above the bottom have to be accounted for.

And while the leaked documents are an incredible look inside how clubs truly operate, greedily we should demand more. Those at the top of MLB’s revenue-making ladder should be placed under the same scrutiny. In a perfect world, the leaker of the MLB club financials would have graced us with the Yankees and Red Sox figures, thus giving clarity to the argument that while the bottom needs accountability, so do those at the top. While a cap is out of the question, lowering the Luxury Tax thresholds and increasing the tax rate for those that break them (that’s you every year since the Luxury Tax was implemented, Yankees) needs to be seriously considered in the next CBA.

“Cap”… “Floor”… those seem out of the question any time soon. But, “salary compression”, a phrase used often at the Commissioner’s Office and the MLBPA, is something that needs more tending to. What was often said, but not given hard numbers to back up, has become common knowledge: even those with the lowest player payrolls in baseball, and some with historically terrible records in the standings, are profitable. Subsidizing clubs at the current levels that continue to lose repeatedly may not be incentivizing them to move up the standings. One thing is certain. Matters have changed since the documents were leaked this week.

FOR MORE ANALYSIS SEE:



Print This Post



Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for freelance and looks forward to your comments.


Sort by:   newest | oldest | most voted
The A Team
Guest
The A Team
6 years 4 days ago

“Since clubs don’t share their financial information”

It seems to me that if the goal is to create greater parity throughout the league via some revenue sharing scheme, then team finances should be totally transparent to the other teams. Of course, this raises all kinds of other problems, not least of which is the probability that the Player’s Union would get a hold of the information and make effective use of it. And better paid players hurts the bottom line.

So perhaps in this case, parity and profitability are diametrically opposed.

Mike in MN
Guest
Mike in MN
6 years 4 days ago

Wahat are the Pirates supposed to do? Sign crappy players for more money? Sign a couple of good players, block the development of other players, and still lose?

And, if they do sign those good players, what should the other teams do (that did sign them)? Should they sign crappy players to more money?

This is silliness. There are a finite number of MLB caliber players on the planet. Why should teams pay other players more money?

Cliff Lee's Changeup
Guest
Cliff Lee's Changeup
6 years 4 days ago

They could try to resign sing their better players or try to acquire good players on the free agent market. I don’t think that would piss off any of their fans and it would be a most honest way of using the money that other teams earned.

matt w
Guest
matt w
6 years 4 days ago

Suppose they had signed the players they traded away — Bay, Nady, Freddy Sanchez, Jack Wilson, Adam LaRoche, Nate McLouth. They’d be just about as awful at the MLB level (look how those players are doing this year), they’d be going broke doing it, their farm system would be considerably worse, and they wouldn’t have been able to afford to sign the two highest-ranked HS pitchers in the last draft.

Under the new team president, general manager, and managing owner, they’re doing a full rebuild, something that they never really tried during their losing streak. The previous GM kept trying to sign veteran free agents and to trade players for major-ready players instead of prospects, and it was a disaster. Maybe the MLBPA has said that (unlike with the Marlins) they have no problem with the way the Pirates are using their revenue-sharing money because the Pirates are actually doing things the right way for once.

Mike in MN
Guest
Mike in MN
6 years 4 days ago

What good players have they let go in the last 5 years with getting nothing in return?

Kevin S.
Member
Kevin S.
6 years 4 days ago

Because they have a collectively-bargained requirement to spend their revenue sharing money on improving the team instead of pocketing it?

Steve
Guest
Steve
6 years 4 days ago

You are totally right. There is absolutely nothing the Pirates can do differently.

Mike in MN
Guest
Mike in MN
6 years 4 days ago

Is that what I said? I mean, put up a straw man if you want, but that’s not what I said at all. IF they drafted and developed very good players, they should retain them. That’s not been the issue, though. They’ve done a brutal job at drafting and developing players. Nearly every guy they’ve cut in the last 5 years has not deserved to be on a MLB roster (or, if he was, he’d be paid close to the minimum anyway, not solving the “they don’t spend enough money” problem).

Someanalyst
Guest
Someanalyst
6 years 4 days ago

Well… they could try to avoid trading Bautista for Robinson Diaz…

Jonathan
Guest
Jonathan
6 years 4 days ago

This would be understandable if the Pirates were going through a rough spell of a few years, but this has been going on for ages. They’ve had plenty of time to funnel that money into their farm system to make SOME progress, but the fact of the matter is they’ve been one of the worst teams in the MLB on a consistent basis for close to two decades now.

epoc
Member
epoc
6 years 4 days ago

Maury: Just to clarify, your position is that the profits the Pirates are making suggest that the proper course might be to give the Pirates less revenue-sharing money, and you believe this because the Pirates have been getting revenue-sharing money, spending little on payroll, doing poorly, and making a profit, and have been doing all this for a long time. Is that right? If so, are you also suggesting that there needs to be some contractual sliding scale in place so that if/when the Pirates do increase payroll in an attempt to compete they are given enough revenue-sharing money to cover their losses? And if that’s so, how do you allow for that without creating an incentive for small market teams to spend $150MM on payroll, knowing their costs will be subsidized?

matt w
Guest
matt w
6 years 4 days ago

They’ve had plenty of time to funnel that money into their farm system to make SOME progress

But the last GM didn’t do it, because he was incompetent, and because he was desperate for a short-term fix to save his job. Funneling the money into their farm system is exactly what the new GM is trying to do. Check out their draft spending.

CircleChange11
Guest
CircleChange11
6 years 4 days ago

Yep.

The problem is that “buy in” to the playoffs generallly starts at around ~80M.

So, what these teams have figured out is that you can do just as well (or badly) with a $30M roster as you often can with a 70M roster, so why throw away $40M?

I mean really, how much payroll would PIT and FLA have to add in order to have the same “roster stars” as PHL, ATL, STL, etc? … and they still wouldn’t be as good as the top teams. Furthermore, who and where are these impact players that they can sign that won’t sign elsehwhere for even more money?

I would rather see a spending basement and ceiling, and then let the Yankees (as representative of big market, elite team) stuff 300M of profit into the owner’s pockets, rather than sign pay 9-12 ~$20M/y guys and make the playoffs 9 outta 10 years.

I have said this numerous times, but the talent that is required for these small market teams to get competitive [1] does not exist (there’s not enough talent out there), [2] will not all be free agents in the same years, [3] are desirable by others teams, including big market teams that drive the price up and out of everyone else’s range.

Even if they decided to go “all in” and spend $100M this year, instead of $30, there likely would not enough quality free agents to make a drastic difference. They’d need to do it for multiple years, and be willing to lose money for a couple years for a chance at winning a title in that 3rd year. They might lose $50M to take a shot at winning the title.

That’s just the way it is.

As we saw in the series about playoff contention and trade deadlines. David DeJesus was the answer for about 10 teams.

The problem for the small market teams is that they really have to draft, scout, and develop VERY well for consecutive years, in order to have a young team flourish at the same time. For example, PIT has some nice young position players, but there’s no pitching. By the time they get some pitching, the position players they want to hang on to will be entering Free Agency.

Tampa Bay should not be discussed as similar as the others, since they are in a very unique situation.

Jeff in So. Indiana
Guest
Jeff in So. Indiana
6 years 4 days ago

Baseball is a business, after all.

If you are an owner and pay $300 million for a typical small-market MLB franchise, earning an after tax profit of $15 million gives you a 5% return on your investment annually. This does not seem high in the context of the general business world for such a large investment.

I would say privately-held businesses would shoot for a higher margin, but baseball teams are a hobby and status symbol for many billionaires.

As the recession hits deeper, I imagine even this small total profit margin will decline further.

ChrisS
Guest
ChrisS
6 years 4 days ago

This does not seem high in the context of the general business world for such a large investment.

And that doesn’t include the appreciation of the club when it comes up for sale. How many clubs sell for less than they were purchased? If anything, there’s usually a line of bidders that want a piece of the action. 5% annual +say 20% total is nothing to sneeze at in this economy. Add in the subsidies and land grabs (Rangers, Texas) and there are plenty of benefits and not much risk.

if I had 400 million, I could think of worse things to spend my money on than indulging in a childhood dream AND making some serious coin to boot.

isavage
Guest
isavage
6 years 4 days ago

The group that currently owns the Pirates bought them in 1996 for $90 million. Forbes estimated the current team value going into 2010 as $289 million. It’s not like Nutting paid $300 million, he was part of the original ownership group from 1996. So making $15 million/year profit on what was initially a $90 investment, while the value of your initial investment has also tripled over the past 14 years, is quite a bit of money. They could have broken even every year, and it still would’ve been a good investment, since they can theoretically sell what they bought for $90 million for around $300 million. The point is, the Pirates have the financial ability to go out and sign high-priced free agents, and instead have chosen to funnel millions of dollars that they have received from other teams into the owners’ bank accounts.

I certainly don’t think the answer is to reduce the amount of revenue sharing, but they need to re-work revenue sharing in some manner to ensure the money is spent on inproving the team.

Jon S.
Guest
Jon S.
6 years 4 days ago

I think that as long as owners see it as a business they own instead of an investment they’ve made, they will expect a profit. A successful business, in the eyes of a businessman, is one that makes money. They measure success in profit, not championships. Championships can bring profit, but it’s easy to be satisfied with $15 million worth of success every year.

Druceratops
Guest
Druceratops
6 years 4 days ago

These are important points. However, in reviewing the financial statements (albeit only for the past two year of the current ownership group) there is a less rosy picture of the teams financial status. The team considers its total assets to be around $230M (not too far off from the Forbes estimate), however, the team has incurred liabilities (including long term deferred contracts, loans, etc.) of ~$150M. It looks like the vast majority of this debt is secured by the assets of the team, so a default would lead to a sale of the franchise as we just saw in Texas. Thus, the equity of the current owners is about $80M. Note that Nutting also loaned the team $20M around 2003 that was not completely repaid and was therefore converted from debt to equity, so the effective purchase price of the team should be increased by that amount (it is not clear how much was not repaid). I do not know how much of the original purchase price for the franchise was financed and paid off from revenues, but given a 3X increase in value of the asset, they have not built up a lot of equity.

Interestingly, the statements also say that the team is also obligated to repay up to 3 installments of $25M each for the PNC park construction cost if certain tax revenue levels are not achieved by the city. However, the team does not list these as liabilities because they consider it unlikely that the required levels will not be reached.

jfish26101
Member
6 years 3 days ago

Very interesting Druceratops.

Jordan
Guest
Jordan
6 years 4 days ago

It seems like the “over subsidy” is at best mis-labelled, and misleading. The amount you calculated is the amount of revenue sharing needed for each of those clubs to break even, i.e. have net income of exactly zero. The amount of net income for each club could reasonably describe an “over subsidy,” if your idea is that no club should ever be profitable while receiving revenue sharing.

I also don’t agree with the sentiment of the last line in my first paragraph either – if there was a cap on profitability, the teams would simply spend more, even if there was little worthwhile reason. How is that helping anyone?

mettle
Member
mettle
6 years 4 days ago

I think the big story should be how Loria bilked the public of money for his stadium while claiming – and as we now know *lying* – to be barely breaking even. The public subsidization of these billionaires is the big crime.

And now they want more tax breaks…

Jim Lahey
Guest
Jim Lahey
6 years 4 days ago

Loria is putting a decent team on the field, without being able to sign people to large contracts due to the financial restraints, and you’re upset that he’s making about 5% on all of the money he has to invest in the team?

Uggla wants to be signed for 5yrs/55m.. there goes any profit with 1 player!

mettle
Member
mettle
6 years 4 days ago

I’m upset that he lied about the money he was making so that he didn’t have to pay for the new stadium.

pounded clown
Member
pounded clown
6 years 3 days ago

It all went for the post game, all night long celebrations Loria had with the go-go dugout rooftop dancers.

Charles
Guest
Charles
6 years 3 days ago

What of the operating debt that the financial statements reveal? Shouldn’t Loria be able to use current profits to pay down past debts? Especially when it would be advantageous towards assuming the additional debts necessary to pay for their $130+ million share of the new ballpark?

Granted their salary is ridiculously low. Embarrassingly low even. However, the financial statements reveal they need every bit of that Yankees and Red Sox revenue sharing. Their stadium and local media revenues are so low that revenue sharing accounts for over a third of their revenues.

Hence the need for a new stadium to stay in what the financial statements reveal is a terrible market and/or terrible lease.

Wally
Guest
Wally
6 years 4 days ago

It is quite interesting to see these numbers. We’ve long suspected they looked similar to this, but now we know.

Ultimately however, I don’t think this proves anything one way or another. Teams could be failing for a number of years for reasons money can’t solve. Unless you’re the Yankees you simply can’t buy a winner. Getting enough good free agents is simply impossible. Either there aren’t going to be enough of them or they will eventually be cost prohibative. So even if you spend $100M a year you need to develop some good players and you need to have a GM that can trade and spend on FAs wisely. Further it should be perfectly acceptable to hord money until that extra FA or two can put you over the top as your home grown guys are finally making major league contributions. So the Pirates and Marlins could quite easily make this argument. And the Rays can simply say they are planning to spend this money as their young talent ages and gets more expensive.

So from this information alone its difficult to know what should happen to revenue sharing in the future. With a little more money the Rays may actually bring in an extra FA, as they have already budgetted current revenue sharing money to go into future spending. And with less they may well just spend less now, or only less in the future. Impossible to say.

Druceratops
Guest
Druceratops
6 years 4 days ago

Maury,

It looks to me as if the Pirates are carrying something on the order of $150MM in debt, including over $25MM in deferred salary which you have not addressed in your calculations of the over subsidy. It is difficult to characterize a small positive cash flow over a couple of years as being a “profit” when the owners have assumed 5-10X that in debt just to generate that cash flow.

Moreover, it looks like current ownership for the Rays and Marlins have accumulated roughly $60MM in debt each as well. Without the revenue sharing provisions the financials of these organizations would look even worse and you would see signficantly lower payrolls. Obviously the players association has an interest in maintaining the status quo because at least it provides a quasi-floor for player compensation.

I would be interested in your reaction to the CPA analysis of the Pirates financials provided here:

http://community.post-gazette.com/blogs/bobsmizik/archive/2010/08/24/a-cpa-s-take-on-pirate-financial-records.aspx?cmpid=bcpanel5

Jeff in So. Indiana
Guest
Jeff in So. Indiana
6 years 4 days ago

Maury,

Your “over subsidy” paragraph is plainly wrong if the intention is to calculate a breakeven on the leaked teams.

You said:

“when subtracting Net Income from Revenue-Sharing we get the amount of “over subsidy” for the years and clubs in the leaked docs (e.g. $24,638,063 more than needed for the Pirates in 2008):

Year Club Net Income Rev Share Diff
2008 Pirates $14,408,249 $39,046,312 $24,638,063”

* But actually the over-subsisdy would in reality be the amount of the net profit (adjusted back for taxes). Since they made $14M in profit, the 2008 Pirates would have lost $24M without the $39M in revenue sharing. The amount of rev. sharing to break even is actually your “over subsidy column”. If you took away $24 M in revenue sharing the the Pirates would have lost $10M, not broke even.

Otherwise an interesting article and nice read even if I don’t agree with your overall stance on revenue sharing.

ChrisS
Guest
ChrisS
6 years 4 days ago

Unless you’re the Yankees you simply can’t buy a winner. Getting enough good free agents is simply impossible. Either there aren’t going to be enough of them or they will eventually be cost prohibative. So even if you spend $100M a year you need to develop some good players and you need to have a GM that can trade and spend on FAs wisely.
Take a closer look at the Yankees. They can’t, and didn’t, just buy a winner. They’ve got a lot invested in player development (of course many end up playing the ML level for another team). They’ve positioned themselves to spend money for excellent players that would be available at the right time and for the right price (yes to Teixeira and Sabathia, no to trading prospects and paying for Johan Santana or Matt Holliday). Swisher was the result of a low BABIP and Kenny Williams not recognizing what he had. Cano, an MVP candidate, was an amateur FA who was talented, but a work in progress.

The Yankees do have a incredible revenue advantage, but they also spend smartly and fill holes with the best possible players. What happens in the next few seasons will be very interesting Yankee-wise. How much Jeter gets and for long, A-Rod getting older but still being paid a ton, and how the bullpen changes once Rivera hangs ’em up.

Wally
Guest
Wally
6 years 4 days ago

Chris, yes, some of that talent is still “home grown” but the vast majority of what makes that team good is thanks to lots and lost of $$$. Cashman seems like a decent GM, but take away his monitary advantage, there is no way he builds the perpetual winner they have.

AdamM
Guest
AdamM
6 years 4 days ago

I don’t think the suggestion is that the Yankees “bought” their entire team … but the fact that the Yankees were able to sign both Teixeira and Sabathia in the same off-season (the best position player and the best pitcher) highlights their advantage of the other 29 teams. They were able to outbid everyone else for the players they wanted.

Put it this way … in 2008 the Yankees miss the playoffs for the first time in 10 years, and they respond by buying the top two possible players. The following season the new position player (Teixeira) finishes runner-up for MVP, and the new pitcher (Sabathia) finishes 4th for the Cy Young.

… and the Yankees win the World Series.

cajuncook
Guest
cajuncook
6 years 1 day ago

Blah blah blah blah blah Yankees blah blah blah blah blah Pirates…

Englishgrey
Guest
Englishgrey
6 years 4 days ago

I don’t get the fuss. The Pirates made a small return on their business and the partners did NOT take any profits out of the club. What’s the problem here? If the Pirates weren’t investing in a good farm system, scouting, and international recruitment, then I can understand the outrage. But as far as I can tell, the Pirates are making competent efforts to rebuild the team into a winner.

If they’ve decided it’s in their best interest not to use ALL of their resources in losing years, and their process is otherwise sound, why should we criticize them?

Randy Brown
Member
Randy Brown
6 years 4 days ago

To a certain extent I agree with you – I couldn’t care less how the MLB owners pass money around between themselves. Where I have a big problem with these financial statements is that all of these clubs have received public funding for their ballparks, and (especially the Marlins) have claimed that they couldn’t fund the parks themselves because they weren’t profitable enough to do so. Jeff Passan wrote about this on yahoo today, actually. I think his article nails it.

My only hope is that these documents once and for all end the fiction that MLB can’t afford to build their own playpens – about 20 stadiums too late. Set aside revenue sharing altogether for a moment – each team received about $40M from the central fund. If only 10% of that money was retained for stadium construction, $4M per team per year = $120M per year = a new stadium, completely self-financed by MLB every 5 years. That’s what is criminal.

Druceratops
Guest
Druceratops
6 years 4 days ago

Not to quibble, but 1 stadium built every 5 years would require the stadium for each team to remain a viable venue for 150 years. That being said your implicit estimate of $600MM in cost for each stadium might slightly be on the high side for today – who knows in the future. If we assume a 50 year effective life for each stadium with modest costs for renovation/upkeep, then, league wide, an average of 0.6 stadiums per year would need to be built. Using your $600MM cost figure that would mean the mlb stadium fund figure would need to be about $360MM per year. The big problem comes in determining who gets a new stadium when since team 30 will contribute into the fund for 50 years before it gets its mlb funded stadium built.

dprat
Member
dprat
6 years 4 days ago

One of the biggest problems in revenue-sharing, and the reason it would make sense to tie it to market size (at least as part of the formula), is that it is a disincentive toward improving your market. Under Loria, building a market for Marlins baseball has, at best, languished, and at worst been actively discouraged. Despite being in a large market and despite fielding winning teams in 5 of the last 7 years, the Marlins have been at or very near the bottom in attendance every year. This actually helps Loria… in part, because he can argue this somehow demonstrates a need for a new ballpark, and in part because he can sit back and collect larger revenue-sharing checks without having to do the hard work of actually building his market. So revenue-sharing, at least in this case, stunts the growth of the Marlins brand, and of MLB overall.

PhD Brian
Guest
PhD Brian
6 years 4 days ago

Although Miami is large in population, it is the oldest and poorest large city in the country. So, it is somewhat unfair to call them an undeveloped large market. I am sure they could do better, but I doubt elderly people on welfare will ever buy tons of season tickets no matter how hard you market to them.

“Its bring your walker to the ballpark day!”

dprat
Member
dprat
6 years 3 days ago

Poorest? According to whom? Baseball teams in metro areas that have both smaller population AND lower per capita income (2008 figures) than Miami:
Milwaukee
Pittsburgh
Detroit
St Louis
Kansas City
Cleveland
Cincinnati
Atlanta
Tampa Bay
Arizona
10 teams… all in poorer areas, all with smaller populations, even a couple with similar population profiles… and every single one of them has better, and usually far better, attendance over the last three years than the Marlins (a time when Florida has been fielding above .500 teams). Some (e.g., Milwaukee!) more than double the Marlins’ attendance every year. Far bigger a factor than age or poverty is Loria, who has driven any fan base away. Why not? Under the current system, he collects his profits – fans or no fans.

pounded clown
Member
pounded clown
6 years 3 days ago

Why go to the game when you can have that Florida ball park experience at home. Here’s how:
1] Turn off the AC and open your windows.
2] Wheel the TV into the bathroom and close door. DO NOT turn on exhaust fan.
3] Get a lawn chair and put it in the shower.
4] Turn on the game. DO NOT undress.
5] Sit in chair, put on raingear (optional) and tun on the shower (luke warm water only, cold water is cheating).
6] Watch game.
7] For more realistic feel vary water flow from time to time. Also turn off water every 15 to 30 minutes., wait 5 minutes and turn on shower again. Repeat throughout the game.

kid
Member
kid
6 years 4 days ago

Until somebody smart figures out how to keep rich people from being greedy, it’s gonna be this same old song and dance.

Randy Brown
Member
Randy Brown
6 years 4 days ago

We’re going to have to get that smart person working on keeping politicians from being stupid too.

mike
Guest
mike
6 years 4 days ago

I have a question for anyone who might know…how much money goes into the MLB central fund?

Franco
Guest
Franco
6 years 3 days ago

Why do these teams even exist if no one cares in their local region? If anything, they should try to relocate or just contract them.

CircleChange11
Guest
CircleChange11
6 years 1 day ago

I’m in favor of contraction.

While I have an affection for KC, and respect their intelligent fans there, the Royals, Pirates, Indians, A’s, Marlins, and Padres could all be contracted, and despite some of them being great in the 70s and 80s, they would likely not be missed after 5 years.

24 teams is good. 2 leagues of 12 teams w/ 2 6-team divisions. If the league wants to keep its expansive and exhaustive playoff format … 3 4-team divisions per league w/ wild card … or … 4 3-team divisions per league. I favor (strongly) 2 6-team divisions based on region (East/West).

These teams don;t draw casual baseball fans, so it’s possible that the die-hatds take on another team.

The same cities have the ability to comparatively pay their players in their NBA and NFL teams, provided the players want to play there and the owners don;t spend the money in a stupid fashion.

Baseball has changed, markets have changed, cities have changed. Tradition is a poor reason for anything.

pft
Guest
pft
6 years 3 days ago

Revenue sharing and revenue hiding go hand in hand.

For example, the Pirates documents state they get 40+ million for TV and Radio rights. The Boston Globe has reported that Red Sox only receive 16 million from NESN (which is 80% owned by the Red Sox). Thats a big chunk of revenue not showing up on the Red Sox books and a sweet heart deal for NESN.
.

wpDiscuz